eTrade 2007 Annual Report Download - page 75

Operating expenses—Total expense excluding interest, as shown on the Company’s consolidated statement
of income (loss).
Operating margin—Income before other income (expense), income taxes, minority interest, discontinued
operations and cumulative effect of accounting change.
Operating margin (%)—Percentage of net revenue that goes to income before other income (expense),
income taxes, minority interest, discontinued operations and cumulative effect of accounting change. It is
calculated by dividing our income before other income (expense), income taxes, minority interest, discontinued
operations and cumulative effect of accounting change by our total net revenue.
Option adjustable-rate mortgage (“ARM”) loan—An adjustable-rate mortgage loan that provides the
borrower with the option to make a fully-amortizing, interest-only, or minimum payment each month. The
minimum payment on an Option ARM loan is usually based on the interest rate charged during the introductory
period. This introductory rate is usually significantly below the fully-indexed rate for loans with short duration
introductory periods.
Options—Contracts that grant the purchaser, for a premium payment, the right, but not the obligation, to
either purchase or sell the associated financial instrument at a set price during a period or at a specified date in
the future.
Organic—Business related to new and existing customers as opposed to acquisitions.
Principal transactions—Transactions that primarily consist of revenue from market-making activities.
Real-estate owned repossessed assets (“REO”)—Ownership of real property by the Company, generally
acquired as a result of foreclosure.
Repurchase agreement—An agreement giving the seller of an asset the right or obligation to buy back the
same or similar securities at a specified price on a given date. These agreements are generally collateralized by
mortgage-backed or investment-grade securities.
Retail client assets—Market value of all client assets held by the Company including security holdings,
customer cash and deposits and vested unexercised options.
Retail deposits—Balances of retail customer cash held at the Bank; excludes brokered certificates of
deposit.
Return on average total assets—Annualized net income from continuing operations divided by average
assets.
Return on average total shareholders’ equity—Annualized net income from continuing operations divided
by average shareholders’ equity.
Revenue growth—The difference between the current and prior comparable period total net revenue divided
by the prior comparable period total net revenue.
Risk-weighted assets—Primarily computed by the assignment of specific risk-weightings assigned by the
OTS to assets and off-balance sheet instruments for capital adequacy calculations. This calculation is for
E*TRADE Bank only.
Stock conduit—The borrowing of shares from a Broker-Dealer and subsequently lending the same shares to
another Broker-Dealer netting a fee.
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